Gencorp Plans 'Alternative,' Urges Holders to Reject Bid

Gencorp urged shareholders Monday to reject a $100-a-share "hostile, unsolicited tender offer" and said the company is developing "a financially superior alternative."

In its first response to the $2.2-billion takeover effort launched March 18 by an investor group, Gencorp Chairman and Chief Executive A. William Reynolds called the proposed deal a "highly conditional, contingently financed, bust-up offer" that "seeks to deny you the true value of your investment."

Reynolds' comments came in a letter sent to shareholders on the eve of the company's annual meeting in Akron, Ohio, site of the conglomerate's headquarters.

General Partners, Gencorp's suitor, expressed disappointment at the "inflammatory and unproductive" response. The partnership, composed of AFG Industries of Irvine and Wagner & Brown of Midland, Tex., already has threatened to sue if it does not receive a "fair opportunity" to acquire the company.

Although Gencorp would not describe its alternate offer, analysts have suggested that it could be an offer by the company to repurchase a portion of its estimated 22 million shares. Analysts have speculated that Gencorp might offer to buy back at least 5 million of its shares for as much as $120 each in order to strengthen its hold.

The company declined to comment on the speculation, but the scenario suggested by the analysts is a carbon copy of the self-tender plan Gencorp embarked on late last year to protect against an unwanted takeover. The company had planned to use the proceeds from the sale of its television stations, including KHJ-Channel 9 in Los Angeles, to repurchase the shares.

However, that plan was derailed when the television station sales were delayed by legal challenges.

But sources said Monday that the group challenging the $387-million sale of New Jersey television station WOR abruptly dropped its action late Friday in a move that would clear the way for the sale to close.

Analysts speculated that the company would move quickly to repurchase its shares after the sale of the television station is final.

General Partners has said that it would sell Gencorp's broadcast stations, a Pepsi bottling operation in Georgia and the Aerojet-General subsidiary in La Jolla, to raise money to retire the debt it must take on to acquire the conglomerate.